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Private Bancorp of America, Inc. Announces Second Quarter 2022 Financial Results - Yahoo Finance
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Private Bancorp of America, Inc.
Second Quarter Highlights
Net income for the quarter was $4.4 million, up 2.4% from the same period in the prior year
Diluted earnings per share of $0.77, up 2.7% from the same period in the prior year
Total loans held-for-investment ("HFI"), excluding Paycheck Protection Program ("PPP") loans, reached $1.4 billion, an increase of $322.9 million or 30.6% year-over-year and $100.8 million or 7.9% over Q1'22
Non-interest-bearing demand deposits grew $143.0 million or 23.7% year over year and $22.5 million from the prior quarter to $747.0 million, representing 51.9% of total deposits
Net interest margin (ex-PPP loans) of 4.57% compared to 4.14% for Q1'21 and compared to 4.51% for Q1'22
Cost of funding sources remained low at 0.20%
The provision for loan losses for the second quarter of 2022 was $659 thousand, an increase of $517 thousand compared to the first quarter of 2022
Allowance for Loan Losses was 1.29% of total loans HFI (ex-PPP loans)
Tangible book value per share of $22.68, down $0.12 from Q1'22 related to a mark-to-market adjustment on the securities portfolio
Private Bancorp of America, Inc. ("PBAM") well capitalized Tier 1 risk-based capital ratio of 9.51% (preliminary)
LA JOLLA, Calif., July 21, 2022 (GLOBE NEWSWIRE) -- Private Bancorp of America, Inc. (OTCQX:PBAM), ("Company") and CalPrivate Bank ("Bank") announced unaudited financial results for the second quarter ending June 30, 2022. The Company reported net income of $4.4 million, or $0.77 per diluted share, for the second quarter of 2022 compared to $6.5 million, or $1.13 per diluted share for the first quarter of 2022.
Rick Sowers, President and CEO of the Company and the Bank stated, "CalPrivate's core franchise continued to organically grow loans and deposits which drove solid growth in net interest income to $18.0 million – our highest level yet. However, given the volatility of the interest rate and credit markets, we experienced a decline in our SBA 7(a) loan sales and the resulting gain on sale income for the quarter."
Sowers continued, "While global events and the rapidly changing environment have put pressure on the overall financial markets and on our own financial results, our model of providing a concierge experience through our dedicated Teams and our core mission of providing Relationships, Solutions, and Trust continues to resonate and provide a stabilizing force to our Clients. We have been able to organically grow net loans (ex-PPP loans) more than $100 million in Q2'22, representing linked-quarter growth of 7.9%.
While the Federal Reserve raised overnight borrowing costs substantially in the second quarter, given our deep Client Relationships and strong referral network, the Bank was able to grow non-interest bearing deposits by $22.5 million while keeping the overall cost of interest bearing deposits low at 0.25%."
Domestic events, including high inflation, have unfavorably resulted in increased non-interest expense, including employee compensation and professional services. The decline in SBA gain on sale was both a result of lower 7(a) loan volumes and a softer secondary market, which led to an increased efficiency ratio of 64.9% from 53.6% for Q1'22. While the industry faces significant headwinds, including an increased possibility of a recession, our Bank continues to invest in the infrastructure to become more efficient and to support the growth of our Relationship Teams committed to serving our Clients.
As a continuation of the Company's investments in innovation to support long-term growth and efficiency, during the second quarter, the Company made additional FinTech investments in BankTech Ventures and the Banktech Consortium Fund, two leading investment management firms focused on providing capital to companies driving innovation in the banking industry and keeping the Company in front of emerging trends.
"The financial earnings power of PBAM remains resilient based on the first half results of 2022. The Company's ability to organically grow loans attests to the Company's successful strategy to stay focused on providing a Distinctly Different service. Diluted EPS for the first half of 2022 of $1.91 is up 22.4% from the same period a year ago," said Selwyn Isakow, Chairman of the Board of the Company and the Bank.
Isakow added, "We are proud of CalPrivate's achievements and financial performance to date, however, we remain cautious on the overall macro-economy. We must remain vigilant in our credit and risk management practices as we continue to evaluate the possibility of a near-term global recession due to significant geopolitical and economic challenges stemming from high inflation, energy supply constraints, volatile global politics, and the on-going war in Ukraine."
STATEMENT OF INCOME
Net Interest Income
Net interest income for the second quarter totaled $18.0 million, representing an increase of $842 thousand or 4.9% compared to the first quarter of 2022. The increase in net interest income for the second quarter was primarily due to increases in organic non-PPP loan balances and higher rates. PPP interest and fee income was $224 thousand in Q2'22, compared to $751 thousand in Q1'22. As of June 30, 2022, only 12 PPP loans with total balances of $2.7 million remained unforgiven by the SBA. Interest expense on deposits increased $83 thousand in Q2'22 vs Q1'22 due to higher deposit totals and an increase in the deposit rates paid to Clients.
Net Interest Margin
The net interest margin for Q2'22 was 4.61% compared to 4.65% for the first quarter of 2022. Excluding PPP-loans, the net interest margin for Q2'22 was 4.57% compared to 4.51% for the first quarter of 2022. The 0.04% decrease in the as reported net interest margin for the second quarter was due to lower loan prepayments and higher cost of deposits. Average portfolio loan yields were 5.37% for Q2'22, compared to 5.51% for Q1'22, including loan prepayment fees. The yield on earning assets for the second quarter was 4.80% for Q2'22 compared with 4.82% for Q1'22 and the cost of funds was 0.20% for Q2'22 compared to 0.19% for Q1'22.
Provision for Loan Losses
The provision for loan losses for the second quarter was $659 thousand, an increase of $517 thousand compared to the first quarter of 2022. While the economy continued to recover in the second quarter, geopolitical events and high inflation have created uncertainty, and this is reflected in our ALLL to total loans HFI (ex-PPP loans) of 1.29%.
Non-Interest Income
Non-interest income was $1.4 million for the second quarter, representing a $1.7 million decrease, compared to the first quarter of 2022. The decrease in non-interest income was primarily due to a decrease in SBA loans sales during second quarter compared to the first quarter of 2022. SBA loan sales for the second quarter were $9.9 million with a 10.5% average trade premium resulting in a net gain on sale of $768 thousand, compared with $26.2 million with a 12.9% average trade premium resulting in a net gain on sale of $2.5 million in the first quarter of 2022.
Non-Interest Expense
Non-interest expense was $12.6 million for the second quarter representing a $1.7 million, or 16.0% increase compared to the first quarter of 2022. Much of the increase was related to the elevated levels of professional services and other expenses given an active and on-going lawsuit for the recovery of the charged-off loan related to the ANI Development, LLC/Gina Champion-Cain fraud case and Chicago Title (parent company, Fidelity National Financial) for their alleged involvement with the fraud scheme.
Additionally, the Company remains committed to making investments in the business, including technology, marketing, and staffing. Historically high inflation and low unemployment has resulted in pressure on wages as well as increased costs related to third party service providers. Related to the strong organic loan growth in the second quarter, the Company also increased its reserve for unfunded commitments by $214 thousand.
STATEMENT OF FINANCIAL CONDITION
Balance Sheet
At June 30, 2022, the Company reported total assets of $1.6 billion representing an increase of $66.6 million or 4.3% compared to the first quarter of 2022. The increase in assets for the second quarter was due to increases in loans supported by growth in core deposits. Total loans HFI increased to $1.4 billion at June 30, 2022 or $94.7 million during the quarter, up 7.4%; excluding PPP loans, total loans increased $100.8 million, up 7.9%. Total deposits were $1.4 billion representing an increase of $69.6 million, or 5.1%, compared to the first quarter. Total non-interest-bearing deposits represented 51.9% of total deposits at June 30, 2022. Additionally, during the quarter, the mark-to-market fair value net loss on the securities portfolio, which consisted mainly of US Treasury and Government Agency debt, increased to -$12.5 million from -$5.6 million from the prior quarter.
Asset Quality and Loan Deferrals
The Allowance for Loan Losses increased $659 thousand to $17.8 million in the quarter with a resulting coverage ratio of 1.29% of total loans HFI, excluding PPP loans. The increase in the Allowance for Loan Losses was primarily due to non-PPP organic loan growth and qualitative loss factors related to the general economic outlook in the markets we serve.
As of June 30, 2022, there were no doubtful credits or charge offs and Classified assets remained at $11.2 million, compared Q1'22. Total classified assets consisted of 10 loans, of which 6 loans totaling $7.9 million were secured by real estate with a weighted average LTV of 45.4%. In addition, all loans that were previously granted payment deferrals related to COVID-19 have resumed their contractual payments.
Capital Ratios (1)
The Company and the Bank's capital ratios were in excess of the levels established for "well capitalized" institutions and are as follows:
 
Jun 30, 2022 (1)
Mar 31, 2022
Dec 31, 2021
Private Bancorp of America
Tier I leverage ratio
8.61%
8.85%
8.42%
Tier I risk-based capital ratio
9.51%
10.31%
10.63%
Total risk-based capital ratio
12.01%
12.94%
13.38%
CalPrivate Bank
Tier I leverage ratio
9.58%
9.72%
9.29%
Tier I risk-based capital ratio
10.57%
11.93%
11.73%
Total risk-based capital ratio
11.82%
13.18%
12.98%
(1)   June 30, 2022, capital ratios are preliminary
Stock Repurchase Program
During the second quarter of 2022, PBAM announced that it had completed its stock repurchase program on April 28, 2022 through the repurchase of 60,000 shares.
About Private Bancorp of America, Inc. Private Bancorp of America, Inc. (OTCQX: PBAM), is the holding company for CalPrivate Bank. CalPrivate Bank provides a Distinctly Different banking experience through unparalleled service and creative funding solutions to high-net-worth individuals, professionals, locally owned businesses, and real estate entrepreneurs. Customers are serviced through offices in Coronado, San Diego, La Jolla, Newport Beach, El Segundo and Beverly Hills as well as efficient electronic banking offerings. The Bank also offers various portfolio and government guaranteed lending programs, including SBA and cross-border Export-Import Bank programs. CalPrivate Bank is an SBA Preferred Lender and a Bauer Financial 5-star rated bank.
Investor Relations Contacts
Rick Sowers President and Chief Executive Officer Private Bancorp of America, Inc., and CalPrivate Bank (424) 303-4894
Mag Wangsuwana Executive Vice President and Chief Financial Officer Private Bancorp of America, Inc., and CalPrivate Bank (424) 348-2145
Safe Harbor Paragraph
This press release includes forward-looking statements that involve inherent risks and uncertainties. Private Bancorp of America, Inc. cautions readers that a number of important factors could cause actual results to differ materially from those in the forward‐looking statements. These factors include the effects of the COVID-19 pandemic and related government actions on the Bank and its customers, loan losses, economic conditions and competition in the geographic and business areas in which Private Bancorp of America, Inc. operates, our ability to successfully integrate and develop business through the addition of new personnel and facilities and merged banks, whether our efforts to expand loan, product and service offerings will prove profitable, the effects of the bank mergers and acquisitions in our markets, system failures and internet security, inflation, fluctuations in interest rates, legislation and governmental regulation. You should not place undue reliance on forward‐looking statements, and we undertake no obligation to update those statements whether as a result of changes in underlying factors, new information, future events or otherwise.
PRIVATE BANCORP OF AMERICA, INC.
CONSOLIDATED BALANCE SHEET
(Unaudited)
(Dollars in thousands)
June 30, 2022
March 31, 2022
Dollar change
Percentage change
June 30, 2021
Dollar change
Percentage change
Assets
Cash and due from banks
$
15,694
$
17,099
$
(1,405
)
-8.2
%
$
12,783
$
2,911
22.8
%
Interest-bearing deposits in other financial institutions
43,857
40,878
2,979
7.3
%
13,969
29,888
214.0
%
Interest-bearing deposits at Federal Reserve Bank
29,241
66,038
(36,797
)
-55.7
%
65,356
(36,115
)
-55.3
%
Total cash and due from banks
88,792
124,015
(35,223
)
28.4
%
92,108
(3,316
)
-3.6
%
Interest-bearing time deposits with other institutions
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